Oil futures tally a fourth straight weekly rise

JennyW. Hsu

Oil futures slipped on Friday, but managed a fourth consecutive week of gains as traders eyed a decline in U.S. crude production for the lower 48 states to a level not seen in more than two years.

Futures also found some support from sizable weekly drawdowns in domestic gasoline and distillate stockpiles, which include heating oil, reported by the Energy Information Administration on Thursday, although inventories of crude oil climbed for the first time in six weeks.

November West Texas Intermediate crude
CLX6, +0.00%
lost 9 cents, or 0.2%, to settle at $50.35 a barrel on the New York Mercantile Exchange. For the week, prices rose 1.1%, after posting gains in each of the last three weeks.

December Brent crude
UK:LCOZ6
on London’s ICE Futures exchange, the global benchmark, fell 8 cents, or 0.2%, to $51.95 a barrel, and ended higher for the week by less than 0.1%.

It has been an “interesting week for crude prices,” Robbie Fraser, commodity analyst at Schneider Electric told MarketWatch.

‘Most of the bullishness can be traced to hints from Russia that they could be open to cutting production but as usual, reality crept back in.’
Robbie Fraser, Schneider Electric

On Monday, WTI prices rose 3.1%—the biggest one-day gain since the Organization of the Petroleum Exporting Countries announced in late September that it had a preliminary plan to cut back production to a set limit.

OPEC is expected to complete details of the proposed production cut at its next official meeting on Nov. 30.

“Most of the bullishness can be traced to hints from Russia that they could be open to cutting production but as usual, reality crept back in,” said Fraser.

OPEC aims to cap its total output to a maximum of 33 million barrels a day, from the current 33.39 million barrels. However, without participation from Russia, which isn't an OPEC member, the pact runs the risk of flopping.

Still, “the resilience that oil prices have shown in spite of all the doubts regarding the OPEC/Russia output cut suggests that not everyone is sharing that pessimism,” said Fawad Razaqzada, technical analyst at Forex.com.

He said he expects OPEC and Russia “to cut or freeze their oil production, which should lend further support to prices this quarter.”

Meanwhile, “the Thursday EIA report was a bit mixed for oil overall,” Fraser said. “The first crude build in more than a month was a key bearish factor, but it came at the expense of product draws and a drop in refinery utilization, so it’s hard to build much momentum on that foundation.”

The EIA said U.S. crude stockpiles climbed by 4.9 million barrels in the week ended October 7 as crude inputs to refineries declined due to seasonal maintenance.

The market also saw a larger-than-expected drawdown in gasoline inventory which dropped by 1.9 million barrels and distillate inventory which fell by 3.7 million barrels, due to higher demand, according to Société Générale.

And domestic crude production for the lower 48 states fell by 36,000 barrels a day to 7.969 million barrels a day. That is the lowest level since June 2014.

On Nymex Friday, November gasoline
US:RBX6
climbed 1.2 cents, or 0.8%, to $1.494 a gallon, for a weekly gain of 0.8%. November heating oil
US:HOX6
shed 1.2 cents, or 0.8%, to $1.567 a gallon—about 0.8% lower on the week.

November natural gas
US:NGX16
fell 5.6 cents, or 1.7%, to end at $3.285 per million British thermal units, after rallying by 4.1% a day earlier to settle at a roughly 22-month high. For the week, it ended about 2.9% higher.

“On the one hand, gas storage remains near historic highs and we’ve got the prospect of some increased production coming on next year,” said Fraser. “On the other hand, the trend favors the bulls as injections consistently come in below normal and winter risk looms in the near future.”

Providing critical information for the U.S. trading day. Subscribe to MarketWatch's free Need to Know newsletter. Sign up here.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.